STI drops 0.6%

The index headed into a consolidation mode, says OCBC Investment Research.

OCBC Investment Research said:

The correction on Wall Street overnight is likely to send the local bourse to a negative opening this morning but the downside could be mitigated by the positive Nikkei start (+0.2% now).

Following two consecutive sessions of recovery, the STI headed into a consolidation mode yesterday. After opening some 0.4% lower, the index slipped a tad further to a 0.6% loss at the close.

With today's tone likely to remain more muted ahead of the weekend, we could see the index consolidating further around current levels with the immediate support now pegged at the 2930 minor trough.

The next base lies at the 2900 key resistance-turned-support. On the upside, the immediate resistance remains at the 3000 psychological level with the subsequent obstacle marked at the 3030 key peaks.

IG Markets Singapore meanwhile noted:

The headwinds have been pretty strong this week to drive investor sentiment lower, although the local market has remained resilient.

A catalogue of concerns including the economic health of Spain and its banks, uncertainty over the Greeks future in the euro, weak Chinese lending data, poor Australian jobs creation and the BoJ’s failure to increase its asset purchase programme have all weighed on markets this week.

In Singapore we eagerly await estimates for Q2 economic growth which is expected to come in at 2.3%. The STI, having dropped 0.6% yesterday, is looking at a slightly firmer open this morning.

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